ACCC holds up Woolworths-BP $1.8b service station deal

The Australian competition watchdog is holding up Woolworths' $1.8 billion sale of its service station network to competitor BP over fears it could see motorists pay more for fuel.

Under the proposed sale, BP would take over and rebrand 543 Woolworths fuel and convenience stores, adding to its 350 existing company-run service stations.

The $1.8 million deal includes its 527 fuel convenience sites and 16 development sites.The Australian Competition and Consumer Commission on Thursday said it was concerned the sale could substantially lessen competition for retail fuel sales and see petrol prices rise.

The watchdog said it was investigating what impact the sale would have on fuel markets in major cities and on hundreds of local markets, each of which had unique competitive dynamics.

"You can't just look at a map and say, well, in a three or five kilometre radius there's five competitors so who cares," ACCC chairman Rod Sims said.

"You may find that the BP and the Woolworths are on the same side of a very busy freeway and they've been competing against each other in significant ways."

Mr Sims said Woolworths typically priced at a lower end of the market than BP, which might not adopt that pricing strategy when it took over Woolworths' stores.